Hi-ho, looking for silver? Try a loan arranger
A new payment service Paym (and pronounced “pay em”), preparing to launch later this month, eventually aims to link up every current account in the country with a phone number, letting you send cash to someone else simply by using mobile phone numbers, not a person’s bank account details.
Similar mobile payment services already exist, but the Payments Council, which is overseeing the initiative, says this is the first industry-wide collaboration in the UK which could potentially link up every bank account with a mobile number — by the end of the year, they say around 40 million people could be using the service.
But why do we need it? Do we really make small payments and loans to friends and family that often? Apparently, yes.
Several centuries after William Shakespeare warned us in Hamlet to “Neither a borrower nor a lender be”, research by the Payments Council estimates that across the UK, we advance a total of £12.6 billion in informal ‘IOUs’ every year to help loved ones and acquaintances out financially, and that every adult lends around £255.81 in informal IOUs each year — that’s £4.90 each, every week.
People typically approach their family for “practical” loans, and more than half (56%) of loans handed out are estimated to be between family members, with a large chunk of this cash coming from the “bank of mum and dad” for some “substantial” purpose, such as to help out with bills, household costs and debt
“Leisure” related IOUs, however, are more common between groups of friends, including informal spending on drinks, meals and transport fares. This “treats and favours” culture was particularly common among younger people, with nearly two thirds (62%) of 18 to 24-year-olds saying they have lent money to close friends for a drink in a pub or a bar.
Although friends seem very willing to lend to each other, larger sums of money tend to be handed out between couples — some 44% of those who said they’d lent their spouse money said they had handed them over £200 in the previous six months.
This is all very well, and very generous, but the trouble comes over how and when these informal, and sometimes seemingly insignificant, loans are paid back — if they are paid back at all.
How will you be able to use the new Paym service? Banks and building societies are joining up to the scheme in waves. You’ll need to actively register their mobile number alongside a nominated current account in order to receive money into that account through Paym. You don’t have to register in order to send money through the service, although your bank or building society does need to be taking part in the scheme.
The service will allow you to transfer cash payments on your mobile by using the recipient’s phone number rather than needing to know their bank account number and sort code.
It will be integrated into your existing mobile banking or payment app. To make a payment, you can either select the contact you wish to pay from your phone or key in their mobile number. The app will ask you to confirm the name of the recipient and the amount before the money is sent.
The service will go live on April 29 and you can find out more about registering by visiting paym.co.uk or asking your bank or building society. Customers of Bank of Scotland, Barclays, Cumberland Building Society, Halifax, HSBC, Lloyds Bank, Santander and TSB can start to register their mobile numbers for the new service now, while those using Danske Bank can register from April 25.
By the end of the year, a total of 40 million people will be able to access Paym, when Clydesdale Bank, first direct, Isle of Man Bank, NatWest, Royal Bank of Scotland and Yorkshire Bank also come on board the scheme. Nationwide Building Society has confirmed its intention to join in early 2015 while Metro Bank and Ulster Bank are also finalising their launch plans.
These documents are sent to pension customers as they approach their retirement date, and they contain vital information designed to help people decide how to use their pension pot.
Around 15 million people are “living on the edge” despite the improving economy, a report by a debt charity has warned.
Stepchange said these people are either falling behind on bills or trying to plug gaps in their income by using credit to pay for essential outgoings. It added that as a result of the high reliance on credit to get by, many people “lack resilience” when it comes to coping with financial shocks, such as a change to their employment situation or the possibility of interest rates rising.
Borrowers searching for a fixed-rate mortgage deal will find that some lenders’ rates have started to edge up, experts have warned.
They suggest that the withdrawal of the Government’s Funding for Lending scheme for households as well as recent rises in swap rates, which lenders use to price their fixed-rate mortgages, are likely to have put some upward pressure on mortgage rates.
Rachel Springall, a spokeswoman for Moneyfacts, suggested that both swap rates and the withdrawal of Funding for Lending for households are having an influence on the market. She added that people looking for a fixed-rate deal may want to think about acting soon.
Home owners have typically earned enough cash by this week to cover their mortgage payments for the whole of 2014, a report has found.
Halifax declared April 10 as “mortgage freedom day” — meaning that, on average, if someone living in the UK put every penny they had earned since the start of the year towards their mortgage, from the 100th day of 2014 they would be mortgage-free for the rest of the year.
The news is not so good for renters: Halifax also calculated that tenants will typically have to wait until May 12 to have earned enough to pay off their annual rental costs.